Is the Toronto Pre-Construction Market Dead? A Hard Look at What’s Ahead

The Numbers Don’t Lie: Toronto’s Pre-Con Math is Broken

The Toronto pre-construction condo market has hit a wall—and there’s no sugarcoating it. On a recent episode of the Toronto Real Estate Podcast, we sat down with Scott Shallow, Executive VP at Brad J. Lamb Realty, to unpack what’s happening behind the scenes, causing the slowdown, and what comes next.

With over two decades of experience in the Toronto real estate market, Scott brings a unique, dual-lens perspective as both a broker and developer. And the outlook? Not great—for now.

The Pre-Construction Boom (& Bust)

There was a time, not long ago, when buying pre-construction made sense. Prices were $100 per square foot cheaper than the resale price. Developers could deliver a finished product with a built-in cushion for market corrections. But those days are gone.

Fast-forward to today, and the numbers just don’t work. Developers need to sell at $1,400–$1,500 per square foot to make a project viable, while the resale value is closer to $1,000 per square foot. That delta is pushing buyers—and developers—out of the market.

Scott puts it plainly: “Pre-construction is dead. It hasn’t been viable since interest rates started climbing in 2022.”

Don’t just read it—hear it straight from the source:

What Went Wrong?

The breakdown is multifaceted:

• Rising development charges: In 2003, the fee for a two-bedroom unit was ~$3,500. Today, it’s $50,000.
• Layered government taxes: HST, municipal charges, carbon levies, and more—all piled on over time.
• Interest rates and investor exodus: Rising borrowing costs have crushed investor demand. “We haven’t had a successful high-rise launch in Toronto since early 2022,” Scott says.
• Rental yield gap: Carrying a unit costs significantly more than renting one today. The math doesn’t add up.

Add in reduced immigration caps, fewer international students, job losses, and a surge in remote work, and you’ve got a recipe for a severe downtown slowdown.

Developers in a Holding Pattern

At Brad Lamb Realty, the launch of new projects downtown has been paused. They’re not alone. Across the industry, concrete towers are shelved. Developers are pivoting to low-rise “stick and brick” builds in more affordable, secondary markets like Hamilton, Guelph, and Kitchener.

“We’ve got 10 years’ worth of sites, but we’re sitting on them,” Scott tells us. “There’s no appetite for condos at today’s pricing.”

What Needs to Happen?

Reviving the pre-con market will require a profound policy shift:

1. Remove HST on new housing
2. Pause or reduce development charges
3. Bridge the resale-pre-con price gap
4. See a meaningful uptick in rents
5. Restore consumer and investor confidence

But as Scott bluntly observes, “That’s a lot of ifs. And there’s no political will to make it happen—at least not yet.”

A Looming Supply Crisis

One of the most under-discussed issues is what happens after the slowdown. With virtually no new towers being sold or launched, we’re heading toward a supply vacuum. Projects that would normally deliver in 2028–2030 simply won’t exist.

When the market rebounds—as it always does—we’ll face fierce competition for a limited number of homes. Prices will likely surge again, and the affordability crisis will deepen.

Will Government Intervention Help?

Short answer: no.

There’s growing buzz around Mark Carney’s proposed Crown Corporation to build affordable housing. However, the idea that the government can succeed when the private sector fails is dangerously naive.

Scott is crystal clear: “The government has no business in construction. They’re inefficient, bureaucratic, and expensive. You can’t build affordable housing at $1,300 a foot—especially when it takes 10 years to get a shovel in the ground.”

Need proof? Look no further than Toronto’s failed Housing Accelerator Fund, the wildly over-budget Eglinton LRT, or the city’s disastrous experiment with owning and managing affordable homes. History keeps repeating itself, yet we continue to pretend that this time will be different.

The Investor Shakeout

The closing dates now appear daunting for buyers who purchased properties at $1,500–$1,700 per square foot in 2021–2022. Blanket appraisals are looming. Rents haven’t caught up. And resale values don’t justify the purchase price. Default rates are rising, and we’ve only scratched the surface.

Scott predicts, “The real bloodshed is coming in the next 12–24 months as more of these units close.”

But not all investors are hurting. Those who bought well—projects like 28 Eastern or Line 5—are navigating the storm with more confidence.

Is Now the Time to Buy?

This could be your moment if you’re an end user or long-term investor.

“I’m seeing resale units at $800–$900 a foot,” says Scott. “That’s below replacement cost. If you can buy for less than it costs to build, that’s a smart play.”

The trick? Move before the headlines turn. When the market shifts—and it will—it will move fast. “The smart money is already buying,” Scott says. “Don’t wait for 15-offer bidding wars.”

Final Thoughts: Let the Market Heal Itself

We’re in a recession. While it’s painful, it’s also part of a natural economic cycle. Booms and busts cleanse the system, create new opportunities, and reset unsustainable trends. Trying to override this process with government spending and artificial market intervention won’t work—it never has.

As we head into the next chapter of Toronto real estate, one thing is sure: the market will return, not just with government blueprints and glossy promises. It will be built back—once again—by real developers, real buyers, and real incentives that work.

Interested in timing your entry into the market?

Reach out to the Fox Marin team—we’re here to help you make informed, strategic decisions in a time of uncertainty.

Contact Fox Marin, Toronto’s downtown luxury real estate brokerage, today to learn more about the advantages of hiring a quality team!

Contact Us (We’re Nice).

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This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.